The rat is a major experimental animal for biomedical research in the fields of pharmacology, transplantation, cancer, toxicology, physiology, immunology, aging, neurobiology, and drug discovery and development. The goal of this proposal is to provide a technical means to introduce modifications into the rat genome to produce new animal models, genetically tailored for specific purposes. The goal of the Phase I project is to generate embryonic stem (ES) cells from rat embryos and to demonstrate their developmental pluripotence in vitro and in vivo. ES cell lines will be derived from rat blastocysts and characterized in vitro with differentiation assays, enzymatic and antibody markers, and karyotyping. The developmental pluripotence of candidate cell lines will be demonstrated through generation of chimeric rats by transplanting ES cells to host blastocysts. The chimeras will be bred to demonstrate germ line transmission of the ES cell genotype. In phase II, rat genes will be targeted through homologous recombination to genetically alter the ES cells, and these cells will be used to generate germ line chimeras. The chimeras will be bred to produce genetically modified animals.